14 September 2016

[140916.EN.BIZ] Panama Canal To Resist Entering 'Price War' With Suez After It Slashes Tariffs

THE Panama Canal will not engage in a "price war" with the Suez Canal, which has started offering discounts of up to 65 per cent, to avoid losing ground to its rival that can accommodate vessels of up to 22,500 TEU compared to the expanded Panama Canal's much lower limit of 14,000 TEU.

According to chief executive officer of the Panama Canal Authority (ACP), Jorge Luis Quijano, ships on the return voyage from the United States east coast to Asia are starting to use the Suez Canal owing to the hefty price reductions, he told news outlet Agencia EFE.

"When we were about to launch our expansion, Suez began with a 35 per cent discount. Later, they raised the discount to 50 per cent and the latest is they've lowered prices by as much as 65 per cent," Mr Quijano said. "We're not going to enter a price war."

Since the expanded Panama Canal opened on June 26, 165 ships have travelled through the new locks, paying US$80 million in tolls, said Mr Quijano, according to American Shipper. He admitted, however, that the Panama Canal loses an estimated $600,000 on average for every containership that transits the Suez instead.

Container shipping lines deploy a total of 94,250 TEU of capacity per week on 14 services that transit the Panama Canal between Asia and North America, compared with 105,892 TEU on 12 services weekly via the Suez, data from ocean carrier schedule and capacity database BlueWater Reporting shows.

Source : HKSG.

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